After yesterday's sell-off, it's time for a fresh Elliott look at the DOW JONES INDUSTRIAL INDEX. As we have run against the mayor resistance level at 12900 in the last days, yesterday's huge drop can be interpreted as the start of a new mid-term Elliott wave. This wave will be the 3rd leg of an ABC formation that started with a dynamic Wave A down during May 2012 and its subsequently corrected in Wave B up until June 20. The recently launched 3rd Elliott Wave C is expected to cover at least 100% of the range of Wave A, i.e. the target area for Wave C will be around 11600. At the current stage (DOW @12600, with our target about 1000 ticks away), this setup provides us with good opportunities to construct mid-term trades with a few weeks holding time and very beneficial risk/reward ratios.
Mid-term: Wave C will likely develop in 5 sub-waves down to 12400, 12000 and finally 11600.
Video Analysis for the Dow Jones Industrial Index
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